News Summary

California is preparing for a possible gas price surge as two major oil refineries, Phillips 66 in Los Angeles and Valero in Benicia, announce plans to close by 2026. This could reduce the state’s refining capacity by 20%, leading to predicted gas prices of up to $8.43 per gallon. Experts warn the closures may cause economic strain on families and industries reliant on fuel. With gas prices already exceeding the national average, job losses are anticipated, raising concerns for local economies. Legislative efforts to control fuel costs face ongoing tension between oil companies and state regulators.

California is bracing for a potential gas price surge as two major oil refineries announce plans to close by 2026. The impending shutdowns of the Phillips 66 refinery in Los Angeles and the Valero refinery in Benicia are projected to reduce the state’s refining capacity by approximately 20%. This decrease could lead to a significant rise in fuel prices, with an analysis estimating that gas prices could reach up to $8.43 per gallon following the closure of both facilities.

Experts, including Professor Michael A. Mische from the University of Southern California, have indicated that after the first refinery goes offline, gas prices may spike to around $6.43 per gallon. The situation may worsen if California decides to implement stricter fuel standards, increases gas taxes, or reauthorizes the Cap-and-Trade emissions credit program. Such actions could exacerbate the impact that these refinery closures will have on fuel prices.

The ramifications of these closures are expected to extend beyond the gas pump. California could face an economic crisis brought on by soaring fuel prices, which would put a strain on working families and affect various industries, such as air travel, food delivery, and healthcare. As gas prices fluctuate and rise, citizens may find it increasingly difficult to afford transportation costs necessary for daily life.

Current Trends in Gas Prices

Currently, gas prices in California average around $4.85 per gallon, surpassing the national average by more than a dollar. This creates an already challenging environment for residents who are grappling with the high costs of living in the state. Since 2001, fuel consumption in California has actually decreased by approximately 11%, indicating a declining demand for gasoline despite the looming supply issues that will arise from the refinery closings.

Job Losses and Economic Impact

The Phillips 66 and Valero refineries not only produce fuel but also employ roughly 1,300 workers directly. Additionally, the closures may affect around 3,000 more jobs statewide due to the economic ripple effect. As these facilities prepare to close their operations, the potential loss of jobs raises concerns about local economies and the ability of residents to find alternative employment.

Political Reactions and Regulatory Challenges

There has been criticism directed towards Governor Gavin Newsom, with some opponents claiming that his policies are creating an unfavorable environment for refinery operations in California. Although the governor’s office has been approached for comment regarding these allegations, no response has been provided as of yet.

As California looks to the future following these refinery closures, it could become increasingly reliant on out-of-state and foreign oil imports. This shift may pose a risk to national energy security, increasing vulnerability to price fluctuations and supply disruptions.

Amid the ongoing challenges of high fuel prices, various legislative efforts have been initiated to tackle this issue. Nevertheless, a considerable amount of tension persists between oil companies and state regulators, complicating the efforts to stabilize fuel costs. With the closure of both major refineries approaching, the potential fallout is expected to be significant across California’s economy and everyday life.